Tribune Co., smothered in debt, files for bankruptcy

Northern Star Online – Media conglomerate Tribune Co., smothered by $13 billion in debt and weak prospects for generating cash through advertising, on Monday became the first major newspaper publisher to seek bankruptcy protection since the Internet began siphoning readers from traditional outlets.

Although Tribune’s next major principal payment on the debt, of $593 million, isn’t due until June, has been in danger of missing lender-imposed financial targets at year’s end. Those targets are based on the level of Tribune’s debt relative to its cash flow, and become harder to meet as revenue declines, even if the debt itself doesn’t increase.

Other newspaper companies have also struggled with their debts, but many have successfully negotiated with lenders to ease their targets in exchange for higher interest rates.